A country imports $20 billion worth of goods and services and exports $15 billion worth of goods and services. What is its net capital outflow?
A)$5 billion, so its residents' purchases of foreign assests exceed foreigners' purchases of domestic assets
B)$5 billion, so foreigners' purchases of domestic assets exceed its resident's purchases of foreign assets
C)-$5 billion, so its residents' purchases of foreign assests exceed foreigners' purchases of domestic assets
D)-$5 billion, so foreigners' purchases of domestic assets exceed its residents' purchases of foreign assets

Question

A country imports $20 billion worth of goods and services and exports $15 billion worth of goods and services. What is its net capital outflow?
A)​$5 billion, so its residents' purchases of foreign assests exceed foreigners' purchases of domestic assets
B)$5 billion, so foreigners' purchases of domestic assets exceed its resident's purchases of foreign assets
C)​-$5 billion, so its residents' purchases of foreign assests exceed foreigners' purchases of domestic assets
D)-$5 billion, so foreigners' purchases of domestic assets exceed its residents' purchases of foreign assets

Quizplus · Accepted Answer

Net capital outflow is calculated as exports minus imports. Here, exports ($15 billion) minus imports ($20 billion) equals -$5 billion, indicating that foreigners' purchases of domestic assets exceed the country's residents' purchases of foreign assets.

A Country Imports $20 Billion Worth of Goods and Services